I realize that economics has been turned on it’s ear for quite a number of years, but raising rates always has tamped down inflation, even in the protracted period of “stagflation” in the seventies it eventually worked, rates had to be raised to a bizarre level in the early Reagan years to finally kill it off, though. It caused a short, but very sharp recession before we started to climb out of it and into the boom times everyone associates with the Reagan era. Right now, I don’t believe the US economy is strong enough to absorb rate increases, personally, it’ll end up killing sales of anything bought on credit which is just about everything above and beyond groceries these days. Not inflationary, I think it’s just the opposite. Deflationary, and we’ve been teetering for years. Some risk there.
I strongly agree. I meant DEFLATION. The first thing I thought was that soon I need to buy more junk silver.
I expect the collapse to be in this order: Deflation, followed by inflation, followed by hyperinflation.
Heck, I think the push for a higher minimum wage is to force price inflation.
Raising interest rates protects the central bankers from the worst effects of inflation. It does not reduce inflation at all. That is merely a cover story to also protect the bankers.
Higher interest rates will immediately reduce commercial credit expansion and may reduce economic activity very quickly. This will hurt a lot of people very quickly too. This will not reduce inflation at all if the Government continues to expand the money supply through bond issues.
We saw all of this in the 70s' It is called "stagflation".